Identify the missing internal control characteristics in each situation.

a. Jade Applications has decided that one way to cut costs in the upcoming year is to fire the external auditor. The business believes that the internal auditor should be able to efficiently monitor the? company's internal controls.
b.	In an effort to minimize the amount of? paperwork, Ross Homes has decided that it will not keep copies of customer invoices related to sales revenue. Ross believes that this effort will minimize the amount of data storage the company will have to pay for.
c.	Elle? Bee, a trusted employee for many? years, has never taken a vacation. The owner believes that? he's lucky that she is so committed to her job.
d.	The Medicine Chest Company keeps a small petty cash fund to handle small cash transactions. Because no one wants to volunteer to be the? custodian, the business manager has decided that all employees should have access to the petty cash. She figures that as long as each employee fills out a petty cash? ticket, then there are proper controls in place.
e.	Due to the cost of maintaining the security? cameras, Wings and More has decided that it will remove the cameras that monitor the cash register.
f.	Bryan? Miller, manager of Hardware? Emporium, prides himself on hiring exceptionally skilled employees who need no training to do their jobs.

2. Identify the possible problem caused by each control weakness.

(1)	Loss of revenue due to? low-quality work.
?(2)	Lost sales due to delay of product development.
?(3)	Theft of cash.
?(4)	Theft of cash and inefficiency.
?(5)	Theft of cash and? inefficiency, lack of support for financial statement transactions.
(6)	Unreliable financial statements and lost credibility.

3. Propose a solution to each internal control problem.

(A)Assign company accoutants to redesign the accounting system.

?(B)Assign one employee to manage the office in the? owner's absence.

?(C)Every organization is? different, so some training is usually required for all employees.

?(D)Have an audit to reduce the risk of false financial statements.

?(E)If the cost outweighs the? benefit, have controls over access to the cash register and separation of duties in regards to counting the cash.

?(F)Keep copies of the customer invoices and look into using electronic copies.

?(G)One person should be responsible for the petty cash fund.

?(H) Require all employees to take vacations.

?(I)Several people should be responsible for the petty cash fund.

Answer rating: 100% (QA)

Solution 1 Identify the missing internal control characteristics in each situation 1 a Firing the external auditor for cost savings is not a good practice It is required under law that an external aud... View the full answer